Not there for work: Connecticut's disappearing labor force

Rob Varnon

Published 12:34 am, Saturday, January 26, 2013

Faith Williams, of Bridgeport, helps Robert Diggs polish his resume at the Connecticut Department of Labor's CT Works Center in Bridgeport, Conn. on Friday January 25, 2013. Diggs is trying to find work in manufacturing and Williams has training as a counselor for children and adults with special needs.
Photo: Christian Abraham

Faith Williams, of Bridgeport, helps Robert Diggs polish his resume...

Rosa Rodriguez, of Bridgeport, uses the computer at the Connecticut Department of Labor's CT Works Center to search for grants to get training to become a phlebotomist in Bridgeport, Conn. on Friday January 25, 2013. At left is Rosa's mom Jacqueline Arroyo who was with her for support.
Photo: Christian Abraham

More Information

Top three states with largest decline in labor force 2011-20121. Connecticut down 51,130 or 2.68 percent2. Missouri down 47,815 or 1.58 percent3. Indiana down 44,349 or 1.39 percent

Top three states showing largest gains in labor force 2011-20121. Pennsylvania up 184,149 or 2.89 percent2. Texas up 127,602 or 1.02 percent3. New York up 92,889 or 0.98 percent

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Developer Bob Carlson managed to convert a Bridgeport office building into apartments during one of the biggest downturns in construction in state history, but he had trouble finding contractors.

"I didn't save much on the labor," Carlson said of the $10 million project on State Street. "A lot of guys are just gone."

Connecticut is trapped in a puzzling economy of contradictions, where economic activity is expanding while the labor force shrinks at the fastest pace in the nation, creating concern for the future direction of this state's fortunes.

Donald Klepper-Smith, chief economist of New Haven-based Data Core Partners, said the number of people actively engaged in the work force in Connecticut, defined as those who are working or looking for work, fell 51,000, or 2.68 percent in 2012, the largest drop in the nation.

"We're moving in the wrong direction, and we're moving there fast," Klepper-Smith said of the chart he produced using U.S. Bureau of Labor Statistics data.

In December, the state's unemployment rate fell 0.3 percent to 8.8 percent despite losing 1,800 jobs. The reason the unemployment rate fell was because there were fewer people in the labor force, not because there were more jobs.

The drop in the labor force has been fairly consistent across the region. Even Danbury, which boasts one of the lowest unemployment rates in the state, saw a 2.5 percent drop in the number of people in the labor force between 2011 and 2012. The Bridgeport-Stamford labor market saw a decline of 2.6 percent during that same period, despite strong activity in Stamford. Some would say this is further evidence of a problem with the statistics on Connecticut employment.

"It's a mistake to say any one factor is responsible for this," Klepper-Smith said.

There is evidence that the state is looking at a mix of reasons for a decline in labor force, including that some of the long-term unemployed stopped looking. Some of the jobless have gone back to school, others have retired and some have moved to where they could find work. There are also people who are working off the books for cash, activity that is not being picked up.

The big question this raises is if hiring finally gets going, will businesses be able to find the people they need locally?

According to Internal Revenue Service data on migration of taxpayers -- those moving in and out -- Connecticut suffered a net loss of 11,454 taxpayers between 2008 and 2010.

The number of people filing tax returns in Connecticut has also fallen by 146,505 between 2008 and 2011, the IRS said. However, the state saw an upswing in filings in 2011, reversing two years of successive declines in the number of taxpayers here.

Joseph McGee, vice president of policy at the Business Council of Fairfield County, thinks the numbers the BLS has been producing on job growth for the state aren't picking up all the activity.

"This is not a sick economy," McGee said, pointing out that gross state product has been increasing, income has been growing and through June, the state had gained 3,800 jobs.

But then, in the fall, the BLS started showing job losses that puzzled McGee and others in the business community.

McGee said he hopes when more accurate data comes out on 2012 later this year, the state will have a better idea of where it stands. A quarterly report surveying all businesses that pay unemployment insurance is expected to be published in March.

While things might not be as bad as the numbers suggest, McGee agrees there is a labor force problem in the state, particularly with the age of the workforce. The state is losing highly skilled, highly experienced workers to retirement and will be doing so in the future as baby boomers leave their jobs.

But McGee said he wonders if what's happening in the state is the fallout from transitioning from an industrial economy into a knowledge-based one that's dependent upon technological skill and education. This trend can create higher-paying jobs, but can also reduce the number of people needed to do those jobs.

"Is Connecticut the canary in a cage for the nation?" McGee wonders. "Is there something in a knowledge-based economy that becomes more productive, but hollows out the middle?"

Part of the issue hurting the state's labor force growth is the cost of living and doing business here, according to the Connecticut Business and Industry Association.

During a conference on manufacturing, Don Janezic, chief financial officer of Fairfield-based Bigelow Tea, said his company did an evaluation recently and found its Idaho and Kentucky operations cost 40 percent less than its Connecticut one.

Janezic, however, did not express dissatisfaction with the state or its policies, citing the energy efficiency programs available here as very beneficial to the business.

Peter Gioia, vice president and economist for the CBIA, noted in a brief presentation that Connecticut has a lot going for it, too. It ranks among the 10 best states for research and development, skilled and educated workers and exports. Overall profitability of companies is above average here.

But even with these advantages, manufacturers expressed concern about finding new workers and the CBIA devoted an hour to a panel discussion on that topic.

One reason for that concern is Connecticut companies are facing competition for talent sometimes from lower cost states.

David Tuttle, head of the manufacturing program at Platt Technical High School in Milford, said Friday before he sat on the workforce panel discussion that he's had calls from Florida companies looking to recruit workers. So far, though, Tuttle said he's not aware of any of his former students going out of state for work.

It's not just blue collar businesses that are struggling.

"A lot of the under- or unemployment is related to a lot of the loss of white collar jobs, especially in the financial services," said David Lewis, chief executive of the Norwalk-based recruitment firm Operations Inc.

He said some of that population has become discouraged and dropped out of the labor force because they haven't found opportunities.

What the state lack, he said, is an emerging industry to fuel a real jump in jobs. The state and nation saw that in the late 1990s with tech and with finance in 2004, according to Lewis.

Still, Lewis expects hiring to pick up this year as some companies delayed filling positions heading into the presidential election and because they were unsure about tax policy heading into 2013. As a result, you'll see some pent up demand bolster the numbers this year.